Own lifestyle goods via EMI

SMART PURCHASES

Want to own that stunning wrist watch or furniture without emptying your pocket?

No problem. Just buy it through equated monthly instalments just the way you buy a home theatre system or an air-conditioner or a car.

In a bid to expand their retail loans base, banks have started treating watches and furniture as consumer goods and financing their purchase.

Ethos, a Mumbai-based premium watch store chain, has tied up with Citibank and ICICI Bank to provide loans to customers to buy watches.

Under the scheme, if one buys a watch of Rs 15,000 through a credit card of either of the two banks, only the principal will have to be repaid in 12 EMIs, while the interest component will be paid by Ethos. The company is planning to extend this tie-up to other banks too. Ethos is promoted by Parwanoo, Himachal Pradesh-based watch component maker Kamla Dials and Devices. It has outlets in Chandigarh, Bangalore and Mumbai.

Says Y Saboo, managing director of Ethos, "Financing of watches is difficult and challenging. It is easy to finance consumer electronics goods as people don't run away with the product. But in the case of watches the case is different."

The mechanism of the furniture loan is different. Tangent, a home decor and imported furniture store based in the Mumbai suburb of Malad, has recently tied up with the Pune-based Cosmos Co-operative Bank to help customers avail of loans.

Says an executive at Tangent, "We refer the customer to the bank and it is up to the bank to approve the client's credentials and approve the loan. The tenure of the loan depends on the bank."

Ethos expects the tie-up with banks would allow consumers to buy watches which are beyond their budget. Loans are available for all international brands starting from a price of Rs 15,000.

Mumbai-based jewellery major Tribhovandas Bhimji Zaveri (TBZ) has a tie-up with HSBC Bank to offer loans towards purchase of high-value jewellery pieces. New generation private sector banks such as ICICI Bank, HDFC Bank and UTI Bank are active players in this segment. Customers are increasingly looking at high value financing to buy art, jewellery, high-end electronic item, travel and mobile handset, a bank official said.

The average interest rates banks charge vary between 14 per cent and 18 per cent. For internal bank customers with a good credit history, the interest rate could be as low as 10 per cent, said a senior bank executive.

"ICICI Bank offers its credit cardholders the facility to convert purchases over Rs 3,000 into EMIs," said ICICI Bank senior general manager V Vaidyanathan. "HDFC Bank offers customised products under its personal loan. The bank has tie-ups with leading furniture outlets, popular jeweller boutiques. We also finances high-end consumer durables to its internal customer," said S Ramakrishnan, vice-president and head retail assets group, HDFC Bank. "UTI Bank offers high-value financing under its personal loan offering called Personal Power," said Sujan Sinha, vice-president retail assets.